Digital wallets have overtaken debit cards as the most popular form of online payment, research has revealed, as the UK e-commerce market sets new records for online spending,
The UK e-commerce market reached £192billion in 2020 in a 13 per cent rise from 2019, according to Worldpay from FIS. It also predicts that by 2024 more than 20 per cent of all purchases in the UK will be made online, with spending reaching £264billion.
In the 2021 edition of its The Global Payments Report, Worldpay from FIS also reveals that digital wallets have leapfrogged debit cards to become the most popular online payment method in the UK.
Digital wallets now account for 32 per cent of all online payments, followed by debit cards (29 per cent) and credit cards (21 per cent). By 2024, digital wallets are predicted to make up 40 per cent of online transactions.
Analysis also suggests that by 2024 40 per cent of all online shopping in the UK will be done via mobile.
Pete Wickes, general manager EMEA at Worldpay from FIS, said: “E-commerce is booming and now, more than ever, retailers need a strong online presence to capture consumer spend. The shop floor is now in the palm of our hands and consumers expect the same hassle free and convenient retail experience – whether it’s on the go, in store or from the comfort of their living room.”
The report also found that buy now, pay later (BNPL) services are the fastest-growing online payment method in the UK, a trend that is expected to continue for the next four years. BNPL transactions in the UK will grow 29 per cent year-on-year, doubling market share to 10 per cent by 2024. Overall BNPL spending in the UK will rise from £9.6billion in 2020 to £26.4billion in 2024.
It follows a report back in December by budgeting-app HyperJar, which revealed one in four consumers in the UK used a buy now, pay later credit scheme to pay for their Christmas shopping in 2020, totalling to £2.3 billion.
BNPL under scrutiny
Earlier this month, the UK’s Financial Conduct Authority outlined plans to regulate buy-now-pay-later agreements used by companies, such as Klarna, after a government review found potential for consumer harm.
Under these plans, providers will be subject to FCA rules so will need to undertake affordability checks before lending and ensure customers are treated fairly, particularly those who are vulnerable or struggling with repayments.